Franco-Nevada (NYSE:FNV) and Dundee Precious Metals (OTCMKTS:DPMLF) Critical Review

Franco-Nevada (NYSE:FNV) and Dundee Precious Metals (OTCMKTS:DPMLF) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Profitability

This table compares Franco-Nevada and Dundee Precious Metals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franco-Nevada	50.39%	11.40%	10.82%
Dundee Precious Metals	35.64%	20.64%	17.98%

Institutional & Insider Ownership

77.1% of Franco-Nevada shares are held by institutional investors. 0.7% of Franco-Nevada shares are held by insiders. Comparatively, 0.3% of Dundee Precious Metals shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Franco-Nevada and Dundee Precious Metals”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franco-Nevada	$1.11 billion	28.64	$552.10 million	$3.20	51.73
Dundee Precious Metals	$606.99 million	4.38	$235.88 million	$1.25	12.74

Franco-Nevada has higher revenue and earnings than Dundee Precious Metals. Dundee Precious Metals is trading at a lower price-to-earnings ratio than Franco-Nevada, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Franco-Nevada has a beta of 0.41, suggesting that its share price is 59% less volatile than the S&P 500. Comparatively, Dundee Precious Metals has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Dividends

Franco-Nevada pays an annual dividend of $1.52 per share and has a dividend yield of 0.9%. Dundee Precious Metals pays an annual dividend of $0.16 per share and has a dividend yield of 1.0%. Franco-Nevada pays out 47.5% of its earnings in the form of a dividend. Dundee Precious Metals pays out 12.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Franco-Nevada has increased its dividend for 2 consecutive years. Dundee Precious Metals is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings for Franco-Nevada and Dundee Precious Metals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franco-Nevada	0	6	7	0	2.54
Dundee Precious Metals	0	0	1	1	3.50

Franco-Nevada presently has a consensus target price of $172.13, suggesting a potential upside of 3.98%. Given Franco-Nevada’s higher probable upside, equities research analysts clearly believe Franco-Nevada is more favorable than Dundee Precious Metals.

Summary

Franco-Nevada beats Dundee Precious Metals on 11 of the 18 factors compared between the two stocks.

About Franco-Nevada

Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent. Franco-Nevada Corporation was founded in 1986 and is headquartered in Toronto, Canada.

About Dundee Precious Metals

Dundee Precious Metals Inc., a gold mining company, engages in the acquisition, exploration, development, mining, and processing of precious metals. The company primarily explores for gold, copper, and silver deposits. It holds a portfolio of projects located in Bulgaria, Namibia, Serbia, and Ecuador. The company is based in Toronto, Canada.